Banks are of two types: Islamic and non-Islamic.
Islamic banks are of three types: privately owned banks, government owned banks, and banks that are co-owned by private individuals and the government.
The more apparent opinion is that legal transactions carried out with government banks are permissible. The same applies to banks which are co-owned by private individuals and the government. The more precautious stance however is that a person should seek permission from the ¦¡kim al-shar’iyy for acquiring money from these two types of banks and for spending it.
2849. Taking a loan from an Islamic bank, or giving a loan to an Islamic bank, wherein a profit or a benefit has been stipulated is considered to be interest-based and hence forbidden. However, there are some ways to avoid being afflicted with interest-based transactions. For example, the borrower may buy an item from the bank or its representative for a specific proportion that is greater than the market-value, such as ten or twenty percent over the market-value, and then stipulate that the bank should loan him the originally desired amount for a specific period. Similarly, he may choose to sell an item to the bank or its representative for a specific proportion that is below the market-value, and stipulate that the bank should loan him the originally desired amount for a specific period.
He may also employ the same method when giving a loan to a bank. For example, the bank may buy an item from him for a value that is above its market-value, or sell him an item below its market-value, and stipulate that the person loan a particular sum for a specific period to the bank.
This result can also be realized by renting, reaching a compromise or gifting with the condition of loaning.
2850. It was elaborated in the previous article that the ruling of giving a loan to the bank is similar to the ruling of taking a loan from the bank. Hence, if a condition of profit or benefit is stipulated within the loan agreement, it will be interest-based and hence forbidden. It will make no difference whether the money is deposited in a savings account or a chequing account.
However if the condition of a profit is not stipulated, and a person does not consider himself as a creditor, it will be permissible for him to deposit the money in that bank, even if the bank pays interest to him.
2851. There is no objection in taking money from non-Islamic banks whose reserves are supplied by k¡firs, regardless of whether it is a government owned bank or a privately owned bank. There is also no objection in depositing money in such banks and acquiring interest from them. A person may also take the sum of the interest with the intention of restitution.